AFTER a decade of underperformance, the Perth office leasing market is poised for strong rental growth that will lead to a new round of office tower construction in the city, according to Knight Frank office leasing director Ian Edwards.
“Although there has been good rental growth over the past six months, the high level of leasing has led to a shortage of quality office accommodation in Perth,” Mr Edwards said.
“This shortage has resulted in a lack of options for larger companies seeking more than 2,000 square metres, who will be forced to pre-commit to new office accommodation.”
The level of rent required to build a new city office tower is around $350 net a square metre per year.
“Larger companies unwilling to pay this rent level will be forced to relocate to city fringe locations such as West Perth,” he said.
Notably, Freehill Hollingdale & Page is seeking 7,000sqm in the CBD and PricewaterhouseCoopers is seeking up to 6,000sqm.
The 14,000sqm Parmelia House is already 85 per cent committed to new tenants.
On top of this, Knight Frank’s office leasing department still has over 100,000sqm of leasing enquiries on its books.
There are a number of development proposals which could go ahead fuelled by this demand.
The 45,000sqm Woodside headquarters at 240 St George’s Terrace has already been given the green light.
Other likely candidates include a planned 18,000sqm at 54 Mounts Bay Road, the 10,000sqm Orchard Village at the corner of Wellington and Milligan Streets, a 20,000sqm development at the Bishop See site and a minimum 30,000sqm at Westralia Square in St Georges Terrace.
“This scale of construction takes a minimum of two years to
complete and, realistically, closer to three years if building delays and fitting out time is included,” Mr Edwards said.
“Based on present demand, there is likely to be an acute shortage of quality office space before the first of these projects comes on stream.
